Market Intel

ERCOT

Market Overview

The Electric Reliability Council of Texas (ERCOT) is a grid operator that manages the flow of electricity to about 90% of the state of Texas. ERCOT runs a competitive, energy-only market. Generators place bids to supply energy or reduce grid load at specific times, and ERCOT puzzles together the lowest cost way to maintain reliability and frequency.

There are a multitude of market products that generators can bid into. They all clear at different prices, in different periods, and on different days. This makes ERCOT the most complex – and also the most lucrative – market for energy storage operators.

ERCOT is the most lucrative wholesale market for storage assets today

  • Large and growing

  • Procures all capacity from within

  • High volatility and frequent scarcity events

Overview of Market Structure

ERCOT is a competitive wholesale market that compensates generators for the electricity that they produce. The market also has a nodal pricing system, meaning energy prices differ from location to location. There are 8K+ nodes in ERCOT, and each calculates prices based on local supply, demand, and transmission constraints.

Key Players

  • Maintains reliability and manages the market to balance energy demand with supply.

  • Own and operate power generation and storage assets bid/sell to the grid.

  • Intermediary between electricity generators and ERCOT; submits bids on behalf of generators and handle financial settlements.

  • Load Serving Entities purchase power from wholesale market to serve end customers.

  • Your market navigator; a platform leveraging real-time data and predictive insights to help maximize revenue, ensure optimal performance and grid stability.

Market products

Generators submit offers to provide energy and ancillary services. ERCOT uses these bids/offers along with grid constraints to determine market clearing prices and provide dispatch instructions.

  • Energy

    Bidding into energy products can see high returns from energy arbitrage, and provides flexibility to lock in returns through the Day-Ahead Energy Market, or capture sudden price spikes in the Real-Time Energy Market.

  • Ancillary Services (AS)

    This almost acts as offering insurance to the grid. You will get a payment for holding capacity, or offering to scale down generation, in moments where there is a mismatch between supply and demand. Bidding into AS can yield consistent returns, and can deliver outsized revenue during scarcity events.

  • Day ahead (DA)

    Offering energy to the grid at a set price, locked in a day in advance.

    Energy

  • Real time (RT)

    Choosing to place a bid using consistently updating forecasts to capitalize on market volatility and price spikes associated with unexpected demand.

    Energy

  • Regulation Up (Reg Up)

    A promise to provide energy to the grid within five seconds of being called by the market operator.

    Ancillary Services

  • Regulation Down (Reg Down)

    A promise to decrease energy generation within five seconds of being called.

    Ancillary Services

  • ERCOT Contingency Reserve Services (ECRS)

    A promise to provide energy to address frequency and/or ramping challenges.

    Ancillary Services

  • Response Reserve Service (RRS)

    Requires resources to be available within a few minutes to maintain system frequency and stability.

    Ancillary Services

  • Non-Spin

    Provides backup generation or demand response capacity that can be brought online within 30 minutes during grid emergencies.

    Ancillary Services

Path to operations

Considerations prior to go-live

    • Qualified Schedule Entity (QSE)
    • Supervisory Control and Data Acquisition (SCADA)
  • Submit all required documentation and technical details of your assets to ERCOT to be recognized within their system.

    • Run shadow bids as though your asset were live and review your performance. Assess how your optimizer operates, and how much revenue your strategy returns. Compare your performance to other assets in the area to benchmark results.
    • Incorporate project specific offtake considerations and  constraints (hedges, charge restrictions, POI constraints tied to a self limiting facility, etc.)
  • Hone in on how much risk you are comfortable taking, and adjust your approach to bidding and state of charge management accordingly.

Operating live assets

Day in the life of an operator

  • Review DA price forecasts and suggest bid plan

    If desired, adjust operating plan to incorporate a unique assumption 
or preferences.

    Day Ahead | 6-9:30AM CT

  • Submit Day-Ahead energy and ancillary services bids

    Bid into highest value products, while leaving space to maneuver in Real-Time as prices warrant.

    Day Ahead | By 10am CT

  • Adjust strategy and operating plan based on refreshed price forecasts

    Your optimizer will automatically refresh your real time bidding strategy based on market awards, and consistently updating forecasts .

    Operating Day | Ongoing

  • Operate the battery to deliver against your DA awards

    Place Real-Time energy bids as desired and possible given state of charge constraints and AS obligations.

    Operating Day | Ongoing

Case Studies

Explore ERCOT case studies

Evaluating performance

Review asset performance across operating days, hours,
and products.

Savvy operators consistently assess asset performance to ensure they are maximizing the value.

Check for:

  • Show specific day: forecasts vs. actual; revenue by product
  • Outline what happened, what could have been done differently
  • Ensure prior commitments are met (outside contracts, etc.) and understand their impact
  • Price predictions vs. actuals

    Evaluate how your strategy and revenue outcomes compared 
to peer assets.

  • Revenue Breakdown

    Visualize revenue drivers by hour and product.

  • Performance Comparison

    Evaluate how your strategy and revenue outcomes compare to peer assets.

Growing your Portfolio

Developing your next project

Project returns vary greatly depending on node selection and asset configuration.

  • Hone in on a location

    Compare achievable revenue outcomes across nodes.

  • Understand the range of possible outcomes

    Test various asset specifications, and project configurations.

  • Deeply understand revenue drivers

    Visualize which products your revenue is coming from, in which hours, and using what dispatch strategy.